The following is a paper discussing how your organization is using technology.

The Lebanese Case

During the last civil war (1975-1990), eighty percent of the Lebanese infrastructure was destroyed. The remaining twenty percent are now outdated. The Lebanese banking sector was heavily affected by the war. They lacked the information technology revolution in the banking sector. It becomes a strategic necessity for the Lebanese banks to implement the new technologies at all levels, transactional level, managerial level and executive level. In the 1990's they started implementing IT capabilities to change the work organization, raise the productivity, cut costs and deliver the best services to their customers and increase their profits in the same time. Most of the Lebanese bankers believe that IT will enable them to face the foreign competition and the possible consequences of the coming peace.

Technology Adoption. The vast majority of the Lebanese banks have set very high standards of excellence for themselves in terms of technology, state-of-the-art facilities, and customer service and customer orientation with all facets of operations totally computerized. The banks also make extensive use of communication technology to provide off-site banking facilities including ATMs.

Their ambition is to position themselves as technology-driven banks offering superior services to both their clientele classes - the corporate customer and the retail customer. The corporate customer typically requires quick disposal of loan applications and maximum returns from the cash balance. The needs of the corporate customer are functions of the speed of response. Technologically the answer to this is a reliable network connecting branches that run on-line.

The first steps. At the early stage, Lebanese banks started to build their databases and automate their work procedures. Most banks have adopted readymade packages for their internal operations. Currently, these banks are replacing their old information systems. The banks branches are planning to provide state-of-the-art services to their customers enabling a rapid growth of the bank's performance in a very competitive marketplace.

Different approaches are followed in the Lebanese banks to acquire and implement the new technologies. Banque du Liban et d'outre-mer (BLOM), for example, has developed its own complete banking information system. While Ban k Audi followed another strategy and purchased an on-line information system providing a real time on line branch network with an up-to-date banking and customer information to senior management, middle managers, end users and business analysts. Both information systems, in BLOM in Bank Audi are scheduled to run during this year. The major reasons behind adopting or developing new information systems are:

• Rapid geographical expansion has forced banks to replace their off-line systems by an on-line system linking the branches to the head office through the telecommunications network.
• Restructuring bank's processes in order to reduce staff expenses which constitute a large part of the operating costs and a heavy burden on its operating profitability.
• Incompatibility of the old systems with the strategic necessity of integrating new technologies like ATMs, telebanking, etc. in order to provide the high quality services to the customers and competing on an equal foot with the foreign banks.

The competition. The Lebanese banks are also planning to offer the entire range of services like telebanking, ATMs, etc. They also respond very actively in the marketplace in introducing new products and services. Arab Bank was the pioneer in introducing ATMs in Lebanon. Arab bank started to install ATM machines in 1993. Other banks followed, by establishing in 1994 a network called Link Network, using Link cards. About 25 banks have joined this network and are sharing now its almost 60 machines located in the major cities of Lebanon. The central bank is expecting that about 700 ATM machines will be installed in Lebanon by the year 2000.

Lebanese banks are also introducing remote banking services. Arab bank was also the first bank in Lebanon to offer this service. Early in 1994, Arab bank installed an interactive voice response system, called Phone Banking. At the same time, it introduced the computer based remote banking service which is called Corporate banking. Four other banks, Allied Business Bank, BLOM, Universal Bank, and the British Bank of the Middle East followed and introduced their telephone based remote banking. However these services are providing only inquiry facilities because they are off-line systems.

Technology Assessment. The diffusion and successful implementation of IT in Lebanese banks is not an easy process. Lebanese banks are facing enormous challenges in mastering the new tools provided by IT. An important constraint to the diffusion and success of IT implementation is the telecommunications infrastructure, another obstacle is managerial practices and organizational weaknesses. In the following section, I will analyse and discuss these obstacles. In evaluating banks'use of technology, we look at both the technology in place to serve today's customer and the plans for serving tomorrow's. The first objective is to examine the bank's deployment of technology relative to what is available, tested, and proven to enhance bank performance. The second is to examine the bank's preparation for the future. We want to answer the following questions: The most important issues to be analysed are :

To what degree is the bank using proven technologies to enhance performance?

Are there any technologies not deployed that would have a significant, positive effect on performance?

What level of specialized training has been received by the officers and employees assigned to selecting, deploying, and managing technology?

What level of systems training has been provided to other officers and employees?

How effective are the systems that are being used?

Is Management monitoring the evolution of banking technologies and planning for the future?

Telecommunication infrastructure. The greatest obstacle to real time electronic banking in Lebanon is the telecommunications infrastructure. Telecommunications in the banking sector is a major factor to the success or failure of any application or service. The Lebanese telecommunications infrastructure was devastated by the civil war. The process of rehabilitation and modernization of this infrastructure started in 1993.According to the recovery plan developed by CDR the telecommunications rehabilitation plan will be completed by the year 1998. This means that banks will not be able to rely on the public network until 1998. The result of such situation is a delay in implementing new services and products like remote banking, electronic funds transfer, real time bank information systems. This has also an effect on the reliability of the services already implemented like ATMs. In order to face this challenge, banks began studying the feasibility of installing a private telecommunications network. Four banks, Bank Audi, Arab Bank, Byblos Bank, and BLOM, started in the early 1996 considering the installation of a private network to connect their branches and thus conduct real time banking operations. This network will also be used to connect the ATMs machines which will thus function on-line. However three problems are delaying the implementation of such network:

• Obtaining a license from the Ministry of Post and telecommunications.
• The high cost of the equipment 0 The lack of coordination between the members of the Lebanese Banks Association.

Human Resources Problems. Banking industry is heavily depending upon information technology that needs professionals for development, implementation and support. Despite the programs performed by many banks to develop their local expertise in IT, there is still a real shortage of qualified personnel. According to a recent survey ( T. Abdul Reda and M. Dayya, Banking IT: a look at Lebanon, AUB, 1996) the following problems were identified:

• almost half of the Lebanese banks do not have one engineer among their staff.
• lack of professional training programs. Financial institutions in Lebanon offer a wide range of training programs to their employees. However, with respect to their technical IT staff the percentage of training programs is much less, because IT staff are considered to be trained, highly qualified and hence do not need extended training sessions. The consequence of such policy is a reduction of the capability of IT staff to be up to date in the most recent advances .
• High turnover rate of technical staff. The turnover rate of the technical staff in some 40% percent the Lebanese banks is around 20%. The low salaries and better opportunities in other industries are the main reasons for this high rate.
• Resistance to change. Resistance to change and the absorption capacity is often neglected once the automation system is adopted. However, this human factor is a critical factor in the success of any banking application of information technology. The only way to solve this problem is to design adequate training programs and increase the awareness of the employees. Most Lebanese banks have realized this fact and some of them have established a training centre.

These are the major obstacles for implementing IT in Lebanese banks. Another point that should be mentioned is the necessity of planning very carefully the development of any new application. A computerization plan is the basis for implementing successful information technology solutions. To be relevant, these plans have to be linked closely to organizational strategies, objectives, priorities and processes.

Strategy for the future

Banks face a serious challenge. The basic structure of the bank is increasingly in conflict with the changing product, delivery, and service needs of the customers The future belongs to financial service providers not traditional banks. The vast majority of large banks, will create value networks. Doing so presents tremendous challenges. Banks will have to first develop a comprehensive distribution system that will enable customers to touch them at multiple points. Banks must also create performance measurement systems to assure the mix products and services they offer are beneficial to both the customer and the bank. They must determine whether to deploy new technologies themselves or with other service providers. Nevertheless, technology alone will not solve issues or create advantages. This technology needs to be integrated in an organization, with the change management issues linked to people resisting new concepts and ideas. It also needs to support a clearly defined and well communicated business strategy.